What is a crypto narrative?
Crypto narratives refer to ideas, stories, or beliefs that are prevalent in the cryptocurrency industry and that influence people’s perceptions and value judgments about cryptocurrencies. They can influence investor sentiment, market trends, and the adoption of new technologies.
Key takeaways
Crypto narratives refer to popular ideas, stories or beliefs in the cryptocurrency industry. They affect people's views and value judgments on cryptocurrencies, and can influence investor sentiment, market trends, and the adoption of new technologies.
One of the most important trends for 2024 is the focus on participation, the idea that anyone can participate without in-depth cryptocurrency and blockchain knowledge. This is reflected in the popularity of meme coins and prediction markets.
Narratives worthy of attention in 2024 include: meme coins, Liquid Restaking Tokens, Liquid Staking Derivatives, Blockchain Modularity, Layer 1, Layer 2 (Optimistic rollup and zero-knowledge rollup), BRC-20, Decentralized Internet of Things Network (DePIN), Telegram encrypted trading robot, prediction markets (Prediction Markets) and real asset tokenization (RWAs).
Crypto narratives can also be misleading or even harmful, especially if they are built on false assumptions or excessive hype. Therefore, it is crucial to critically evaluate narratives and make investment decisions based on solid analysis and research.
Source: Vernacular Blockchain
Market participants are always looking for trends to better understand what is currently happening in the market, why it is happening, and its potential impact. Historically, they usually predict the future market environment in advance through the dynamic performance of market cycles. From Elon Musk’s posts driving $DOGE price swings to the belief that Bitcoin’s halvings bring about a bull run every four years, many investors look to cryptocurrency’s market narrative to predict price movements.
For example, the narrative of cryptocurrencies as “stores of value” has attracted many investors who view them as a hedge against economic uncertainty. Similarly, the narrative of blockchain as a “disruptive technology” has attracted many entrepreneurs and developers who are committed to developing new applications on the blockchain.
1. What is encrypted narrative?
This article was updated in January 2024 by the CoinGecko team to reflect new and emerging crypto narratives.
Market participants are always looking for trends to better understand what is currently happening in the market, why it is happening, and its likely impact. Historically, people have used the dynamics of market cycles to take more proactive action in future market conditions. From Elon Musk’s posts driving $DOGE (Dogecoin) price swings to the belief that Bitcoin’s halving will bring about a bull run every four years, many investors are predicting price action through crypto narratives.
For example, the “cryptocurrency as a store of value” narrative has attracted many investors who believe that cryptocurrencies can serve as a hedge against economic uncertainty. Likewise, the narrative of “blockchain as a disruptive technology” has attracted many entrepreneurs and developers who are committed to developing new applications on the blockchain.
Why is crypto narrative important?
Crypto narratives arise from a variety of factors, including the technical capabilities of crypto and blockchain, social and economic events, and the beliefs and motivations of individuals within the cryptocurrency industry. Main streamers, social media, online forums, KOLs and market trends may all drive the narrative. In 2024, we see more and more narratives exploring the capabilities and applications of blockchain, such as the Decentralized IoT Infrastructure Network (DePIN). However, there are also narratives like meme coins and prediction markets that are rapidly emerging. These narratives make crypto markets more accessible to anyone because they do not require a deep understanding of the crypto industry.
Narratives matter because they play an important role in shaping public perception and subsequent market movements. They provide a framework for understanding the potential risks and rewards of different types of cryptocurrencies and could influence the trajectory of the entire cryptocurrency industry.
However, crypto narratives can also be misleading or even harmful due to faulty assumptions or excessive hype. Therefore, it is important to critically evaluate these narratives and make investment decisions based on solid analysis and research.
Today, several emerging trends and themes are trying to define 2024. In this guide, we’ll take a look at the top crypto narratives to watch in 2024:
2. Memecoins
Memecoins remain one of the most profitable narratives in 2024, and market expectations for a memecoin supercycle are growing. CoinGecko data shows that SPX6900 and Gigachad top the list of gainers in the third quarter. Additionally, there are other meme coins reaching new heights, such as $GOAT becoming the first Pump.funToken to surpass $1 billion in market capitalization. As of this writing, the total market capitalization of meme coins has reached $107.5 billion.
As the name suggests, meme coins are based on Internet memes and trends and are supported by a passionate community. They are usually positioned as entertainment tokens, relying on a growing community to achieve viral spread and growth. Meme coins also provide traders with an easy way to participate in the hype of popular blockchains, as such tokens often sell for just pennies when issued. Unlike other narratives, potential buyers don’t need to have in-depth knowledge of the cryptocurrency world to join in on the hype, as most meme coins have little practical use when released.
2024 also gave rise to the Meme Coin Generator, which simplifies the Token creation process and allows anyone to issue their own Meme Coin without a technical background. The biggest player in this industry is Solana-based Pump.fun. To date, more than 3 million Tokens have been issued on Pump.fun, with total revenue exceeding $187 million.
As of this writing, Solana and Base are among the most popular blockchains for meme coins.
3. Prediction Markets
Prediction markets allow users to place bets on ongoing and future events via cryptocurrency, allowing users to purchase “yes” or “no” shares. Once the event is over, users who choose the correct option will receive benefits based on the number of shares purchased.
Polymarket is the largest of these prediction markets, with its most recent “2024 Presidential Election Winner” prediction having a trading volume of over $732 million. Other popular prediction market categories include sports, business and pop culture.
4. Liquid Restaking Tokens
Re-staking is an increasingly popular narrative that focuses on improving capital efficiency, allowing users to use the same token to stake simultaneously on different protocols, providing security for multiple networks. This mechanism helps protocols solve the challenge of building their own validator clusters while providing security with scalable functionality based on the needs of their respective protocols. As a reward, restakers can earn additional rewards through their restaking strategy (but also face additional slashing risks).
EigenLayer is a pioneer in the restaking industry, with a total locked volume (TVL) of over 3.5 million Ethereum at the time of writing. Users can re-stake their liquid staking tokens such as stETH, rETH and cbETH on EigenLayer to provide security for the Active Validation Service (AVS).
The top liquid staking tokens can be viewed on CoinGecko.
5. Liquid Staking Derivatives (LSDs)
Liquid staking derivatives are cryptocurrencies issued by the liquid staking platform, allowing stakers to unlock their liquidity-constrained pledged assets and earn more. In standard staking, stakers provide security to a Proof-of-Stake (PoS) blockchain by depositing assets into the protocol. However, this approach leads to capital inefficiency because the staker’s assets are locked up and unable to generate additional income.
It is in this context that liquid staking came into being. The value of derivative assets is linked to the underlying asset (the asset locked when staking on the proof-of-stake blockchain), and rewards accumulate over time, increasing in value. At the same time, derivative tokens can be used for other DeFi activities, such as borrowing and providing liquidity. As a reward, most liquid staking providers take 5-10% of the market share from staking rewards as revenue.
Liquid pledged derivative financial products solve the problem of low capital efficiency, lower the entry threshold for pledges, and improve the security and stability of the network.
The top liquid staking tokens can be viewed on CoinGecko.
6. Blockchain Modularity
Early blockchains, such as Bitcoin and Ethereum, were monolithic structures, that is, the blockchain needed to perform all tasks. However, as the focus of competition shifts from performance to cost and flexibility, the modular era of blockchain is gradually coming. Modularization splits the blockchain into independent components, allowing the blockchain to break through the current limitations of expanded functions.
Modular components include:
Execution layer: responsible for transaction execution
Settlement layer: Responsible for settlement, fraud proof and connection to other execution layers
Consensus layer (Consensus): Responsible for reaching agreement on the transaction sequence
Data Availability layer: Provides accessible data to all network participants
Transaction execution usually occurs on Layer 2 chains, such as Optimism and Arbitrum, which are responsible for executing transactions and sending packaged transactions to the main chain. In addition, the second-layer chain itself is gradually being modularized, such as OPStack, which modularizes all elements of the second-layer chain into standardized open source modules that developers can use to create new blockchains.
Meanwhile, EigenDA is a decentralized data availability layer built on Ethereum and is currently used by the Layer 2 chain Mantle to provide data availability support.
Layer 1 blockchains like Celestia are also adopting modular architecture. In Celestia's case, the focus is on consensus and data availability, optimizing storage. This allows Layer 2 chains built on Celestia to focus on building an optimal execution environment for their applications.
Source: Vernacular Blockchain
6. First layer blockchain (Layer 1s)
The first layer (L1) blockchain is the infrastructure on which other blockchain applications (such as smart contracts) are built. They perform most on-chain transactions and serve as the “source of trust” for public blockchains. Traditional L1 blockchains, such as Ethereum, usually face problems such as slow transaction speeds, low scalability functionality, and high handling fees. At this point, the second layer of the blockchain (Layer 2s) appears, responsible for executing transactions, so that L1 can focus on publishing and verifying these transactions. However, new L1 networks are changing the landscape in terms of transaction speed, cost and interoperability.
Here are some noteworthy L1 projects that are in the spotlight as the L1 narrative heats up:
Solana: Although Solana launched in 2020, its ecosystem has become the most popular blockchain ecosystem in 2024, accounting for 38.8% of crypto investors’ on-chain narrative interest. One of the main reasons for the popularity of the Solana ecosystem is the current wave of meme coins. Solana’s high speed and low fees, coupled with the viral spread of Pump.fun, a meme coin generator, make it a meme coin. One of the main chains of speculation.
Sui: Sui is an "infinite platform" for building rich and dynamic on-chain assets from games to finance. It is the first permissionless L1 network designed from the ground up for creators and developers to serve the coming billion Web3 users. Sui was created by Mysten Labs, a team of ex-Meta engineers.
Sui meets application needs through horizontal expansion of functions, unlimitedly improving scalable functionality while ensuring economical transaction costs. In addition, it significantly improves scalability functionality and supports parallel consensus for simple transactions such as NFT minting and transfers. Complex transactions (such as asset management and DeFi applications) are handled by DAG-based Narwhal and Bullshark memory pools and Byzantine Fault Tolerance (BFT) consensus mechanisms.
7. Second level: Rollups
The vertical scaling narrative focuses on the second layer (L2), with these protocols building on top of L1 to further scale capabilities and enhance them. L2 significantly reduces L1's computational burden by moving transactions off-chain for execution, thereby significantly increasing transaction throughput. L2’s total locked volume (TVL) has grown steadily, maintaining strong performance even in the face of negative sentiment in the DeFi market and the overall crypto market.
A. Optimistic Rollups
Optimistic Rollups is an extension solution for L2 designed to increase transaction throughput and reduce fees while maintaining the security of the underlying blockchain. They utilize a trust-based model where transactions are confirmed off-chain and confirmed by a small group of “witnesses” before the transaction is added to the underlying blockchain.
Source: Beat
Here are some L2 Optimistic Rollups projects worth keeping an eye on in 2024:
Base
In February 2023, Coinbase launched Base, an L2 blockchain built using Optimism’s OP Stack, designed to serve the upcoming millions of Web3 users and rely on Coinbase’s large user base. The Base network provides creators with a secure, low-cost, and developer-friendly solution for building Web3 applications. Since its launch, Base has continued to grow in popularity, with increased investor interest in 2024, making it the second most popular chain after Solana. Base is also popular among meme coin traders, with the market cap of its top meme coin, BRETT, exceeding $1 billion.
Decision
Arbitrum is an L2 extension solution that utilizes Optimistic Rollups to achieve high throughput and reduce user transaction costs. Even after The Merge, Ethereum's speed and gas fees are still higher compared to other networks such as Arbitrum. This led many Web3 users and creators to switch to the Arbitrum network, driving its total volume locked (TVL) to a high of $3.2 billion in November 2021.
The recent ARB airdrop injected significant liquidity into the Arbitrum network. Many users who obtain ARBTokens are incentivized to use these tokens to trade, stake, or provide liquidity to various decentralized exchanges and protocols on the Arbitrum network. The airdrop also helped raise the profile of the Arbitrum network and showcased its potential as an Ethereum L2 scaling solution.
Optimism
Optimism is positioned as a "fast, stable, scalable L2 protocol, designed by Ethereum developers for Ethereum developers." It is built as a minimal expansion function of the current Ethereum blockchain to seamlessly expand functionality Ethereum applications. Unlike common EVM-compatible chains, Optimism is EVM-equivalent, which means that Optimism fully complies with the formal specifications of the Ethereum blockchain and runs in sync with Ethereum. Optimism also launched OPStack, which standardizes various modular elements of L2 chains so that developers can build new chains that interoperate with Optimism. Optimism’s TVL reached an all-time high of $1.15 billion in August 2022, according to Defillama data.
B. Zero-knowledge rollups (ZK Rollups)
Zero-knowledge rollups (ZKRollups) are a Layer 2 scaling solution that improves Layer 1 throughput by moving calculations and state storage off-chain. They can process a large number of transactions in batches and publish summary data on the chain. The core of ZK Rollups is the ability to prove knowledge of something without giving away information. Therefore, they are very attractive in application scenarios with high privacy requirements, such as digital authentication and confidential transactions.
Here are some ZK Rollups projects to watch in 2024:
zkSync Era
zkSync Era is an L2 summary solution utilizing Zero-Knowledge Proofs, designed to expand the functionality of the Ethereum network without sacrificing its security and decentralization. zkSync Era stores most of the calculations and data off-chain, allowing users to enjoy the security of Ethereum while obtaining higher transaction speeds and lower transaction costs.
Polygon zkEVM
Polygon zkEVM launched in Mainnet Beta on March 27, 2023, an important step in driving Ethereum’s expanded capabilities and achieving mainstream Web3 adoption. Similar to Optimism, Polygon zkEVM is EVM-equivalent, which means that most Ethereum-native applications can run directly on zkEVM without developers needing to modify or reimplement their code.
Scroll
Scroll is an L2 solution dedicated to infinitely scalable functionality, high throughput, complete decentralization, and trust-minimized privacy. It achieves this goal by combining ZK Rollup with a high-performance on-chain decentralized system.
Taiko
Taiko is a ZK Rollup Layer 2 that aims to be the closest equivalent to Ethereum, providing dApps with a scalable and efficient platform without any changes to existing protocols. Unlike many other ZK Layer 2s, Taiko focuses on achieving full compatibility with Ethereum rather than pursuing ZK proof generation speed, which allows developers to reuse execution clients without significant adjustments. Users can personally experience Taiko’s functionality by participating in the protocol usability testing of the Taiko testnet.
8. Bitcoin Layer 2
Similar to other Layer 2s, the Bitcoin Layer 2 project attempts to augment the functional Bitcoin blockchain by developing an execution layer that provides higher throughput and more operations than the mainnet. Layer 2 on the Bitcoin network provides an execution layer different from the main network, supporting operations such as virtual machines (such as EVM) and smart contracts. However, the Bitcoin Layer 2 network faces some challenges, such as ensuring secure cross-chain interoperability between Bitcoin and its Layer 2 network, and maintaining high speed and low cost when settling proofs on the Bitcoin network.
Layer 2 on the Bitcoin network includes state channels (like the Bitcoin Lightning Network), sidechains (like Stacks and Rootstock), and even Merlin-like Rollups.
Bitcoin: Ordinals, BRC-20 Tokens and Runes
Ordinals are one of the latest hot trends on Bitcoin. In January 2023, software engineer Casey Rodarmor deployed the Ordinals protocol on the Bitcoin blockchain, making it possible to mint NFTs on the mainnet. This move caused different reactions from the Bitcoin community. Some people believed that it would pose a threat to the Bitcoin blockchain, while others were excited about it and began to create works called "Inscriptions" - the Bitcoin version of NFT.
Similar to NFTs, Ordinal Inscriptions are digital assets recorded on a Satoshi, the smallest unit of Bitcoin. However, unlike NFTs, which use a decentralized file storage system, Ordinals are stored directly on-chain. These inscriptions are made possible thanks to the Taproot upgrade introduced to the Bitcoin blockchain in November 2021.
The number and order of Bitcoin Ordinals is closely watched, and there are currently some well-known series and high-priced sales, including Ordinal Punks, Taproot Wizards, Bitcoin Rocks, Timechain Collectibles, Ordinal Loops, Ripcashe's Power Source, Bitcoin Shrooms, The Shadow Hats, The Dan Files and Toruses.
In addition to Ordinals, BRC-20 Token has also attracted much attention. BRC-20 Token utilizes Ordinals engraving technology to achieve the function of minting and transferring homogeneous Tokens on the Bitcoin blockchain. BRC-20 Tokens are similar to the ERC-20 standard on the Ethereum and EVM networks and are minted by the community. Once BRC-20 Tokens are deployed, Ordinal wallets can freely mint these Tokens. Although still in its early stages, there are already platforms that support the decentralized minting and trading of BRC-20 Tokens.
In 2024, with the fourth Bitcoin halving, Rodarmor will launch a new homogeneous Token protocol for the Bitcoin ecosystem, which will make it easier and more efficient for users to create Tokens on Bitcoin. Runes may be riding on the popularity of meme coins. Rodarmor even said, "Fungible Token is 99.9% a scam and a joke." However, with this more efficient protocol, it is expected to bring significant transaction fee income, developer attention and user growth to Bitcoin.
9. Decentralized Physical Infrastructure Network (DePIN)
DePIN refers to a decentralized physical infrastructure network that develops real-world infrastructure through blockchain and Token rewards, covering multiple industries such as wireless connectivity, geospatial mapping, travel, health, and energy.
The goal of DePIN is to create resource-efficient physical infrastructure by incentivizing providers to commit their physical resources to a decentralized network. DePIN then provides these resources to users seeking relatively low-cost services, and the network generates revenue through the fees paid by users.
View popular DePIN Tokens on CoinGecko.
10. Real World Assets (RWA)
Real-world assets (RWAs) refer to assets that exist in the real world or off-chain, and these assets are transferred to the chain through tokenization to serve as a source of income in DeFi. Such assets include real estate, precious metals, commodities and art. RWA is a core component of the global financial system; for example, global real estate valuations reached $326.5 trillion in 2020, while the total gold market value was $12.39 trillion. A growing number of RWA projects are looking to U.S. Treasuries and high interest rates to offer investors lower-risk returns, including companies like Ondo Finance.
MakerDAO has also entered the RWA industry, investing idle assets into short-term bonds and using the proceeds to drive the MKR buyback program and increase the DAI savings rate. This is a typical example of a protocol benefiting from RWA investments. MakerDAO demonstrates how value can flow back to token holders, and its buyback program has fueled MakerDAO’s growth.
The potential impact of RWA on DeFi is huge:
They can provide a sustainable and reliable source of income for DeFi because they are backed by traditional assets.
They can help DeFi become more compatible with traditional financial markets, ensuring greater liquidity, capital efficiency and investment opportunities.
They can bridge the gap between DeFi and traditional finance (TradFi).
Maple Finance (MPL), Goldfinch (GFI), and Centrifuge (CFG) are other projects focused on RWA lending that are worth a look.
Check out popular RWA Tokens on CoinGecko.
11. Telegram trading robot
In 2023, the use of Telegram cryptocurrency trading bots has surged, providing users with the convenience and efficiency of executing transactions. Users do not need a computer to connect to the wallet and approve the transaction. They only need to copy and paste the Token's contract address and send it to the chat to purchase Tokens. This also speeds up the selling process as the deal can be pre-approved and signed.
Some Telegram trading bots also have additional functions, such as multi-wallet snap-up, which can bypass the single wallet limit of a token; and liquidity snap-up function, which can execute buy orders immediately when increased liquidity is detected to maximize the income of new tokens.
Check out our article on “Top 5 Telegram Trading Bots” to learn more about the features of different Telegram crypto trading bots.
12. Summary
In 2023, we see narratives such as artificial intelligence, Chinese concept tokens, and decentralized social media, as well as narratives such as Layer 1, Layer 2, liquid collateral derivatives, real-world assets, Bitcoin Ordinals, and BRC-20. Looking ahead to 2024, emerging narratives include Restaking, DePIN, DeSci, GambleFi, and a focus on blockchain modularization.
Please keep in mind that this article is for educational purposes only and should not be considered financial advice. Please do your own research (DYOR) before investing in any asset.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: (PANews)
Original author: Josiah Makori
"What is a cryptographic narrative?" Inventory of popular narratives in the currency circle in 2024, 11 major tracks not to be missed. This article was first published in "Crypto City"
